U.S. President Donald Trump recently signed an order approving a new project aimed at transporting Canadian oil across the border to revive sections of the Keystone XL pipeline that had been canceled. South Bow, the Canadian company initially behind the scrapped Keystone XL project, is partnering with U.S.-based Bridger Pipeline for this new endeavor.
The proposed project involves potentially reactivating parts of the existing pipeline in Alberta and Saskatchewan, with Bridger Pipeline planning the construction of a 1,038-kilometer pipeline from Phillips County, Mont., near the U.S.-Canada border to Guernsey, Wyo. White House Staff Secretary Will Scharf described the project to Trump as a trans-border pipeline akin to the original Keystone XL pipeline, to which Trump responded positively, emphasizing the potential job creation.
If the project proceeds, it could boost Canada’s crude oil exports to the U.S. by over 12%. Unlike the previous Keystone XL route that faced cancellation by former President Biden in 2021 due to Indigenous and environmental opposition, this new proposal charts a different path through the U.S. while utilizing sections of the already permitted pipeline in Canada. South Bow is evaluating the Prairie Connector project to leverage existing infrastructure and permitted corridors for enhanced market access for Canadian crude oil.
South Bow, established in 2024 following TC Energy’s divestment of its oil pipeline business, aims to address market demands driven by increased oil production in Canada and global energy challenges. Despite the project’s potential benefits, legal hurdles similar to those faced by Keystone XL are anticipated.
The proposed pipeline could transport approximately 550,000 barrels of Canadian crude daily to the U.S., contributing to Canada’s energy trade ties with its southern neighbor. Regulatory approvals will be necessary for the project to advance, with Canadian officials emphasizing the country’s commitment to energy security and trade diversification.
The presidential permit for the project coincides with ongoing trade tensions between Canada and the U.S., with negotiations on a new North American trade agreement on the horizon. The revival of discussions surrounding Keystone XL during trade talks underscores the significance of energy cooperation between the two nations.
During the construction of the Canadian segment of the Keystone XL pipeline, significant employment opportunities were generated, showcasing the economic impact of such projects. The original Keystone XL pipeline, planned in 2005, aimed to transport crude oil from Alberta to Nebraska and ultimately to U.S. Gulf Coast refineries. TC Energy’s unsuccessful legal battle in 2024 to recover damages from the U.S. government marked a pivotal moment in the pipeline’s history.
